HIGH COURT OF ALLAHBAD
MOOTHAM, SAPRU, JJ.
Rameshwar Prasad Kedarnath
Versus
District Magistrate
Writ Appln. No. 173 of 1953
Decided On : 03-09-1953
LICENSING - Renewal of License - Right to Hearing - Fundamental Right to Carry on Business - U.P. Controlled Cotton Cloth and Yarn Dealers Licensing Order, 1948, Cl. 11 - Constitution of India, Arts. 19(1)(g), 226.
Fact of the Case:
The petitioner, a cloth dealer, was granted a license under the U.P. Controlled Cotton Cloth and Yarn Dealers Licensing Order, 1948, which was renewed twice for a period of one year each. Before the expiry of the second renewal, the District Magistrate cancelled the license without giving any reasons. The petitioner applied for a renewal of the license, but it was refused by the District Magistrate on the ground of malpractices and bad reputation. The petitioner filed a petition under Art. 226 of the Constitution, challenging the order of the District Magistrate.
Finding of the Court:
The Court held that the refusal to renew the license was an administrative act and that the Court could not interfere with such order by a writ in the nature of certiorari. However, the Court held that the order was made in circumstances which ran counter to the elementary principles of justice, as the petitioner was not given an opportunity of being heard before the refusal of the renewal of the license. The Court further held that the right to carry on business is a fundamental right under Art. 19(1)(g) of the Constitution and that the petitioner was prima facie entitled to a license.
Issues: 1. Whether the refusal to renew the license was an administrative or quasi-judicial act? 2. Whether the petitioner was entitled to a hearing before the refusal of the renewal of the license? 3. Whether the refusal of the renewal of the license was made in circumstances which ran counter to the elementary principles of justice?
Ratio Decidendi: 1. The Court held that the refusal to renew the license was an administrative act, as there was nothing in the U.P. Controlled Cotton Cloth and Yarn Dealers Licensing Order, 1948, which expressly or by necessary implication imposed the duty on the Licensing Authority to act judicially. 2. The Court held that the petitioner was entitled to a hearing before the refusal of the renewal of the license, as the right to carry on business is a fundamental right under Art. 19(1)(g) of the Constitution and that the petitioner was prima facie entitled to a license. 3. The Court held that the refusal of the renewal of the license was made in circumstances which ran counter to the elementary principles of justice, as the petitioner was not given an opportunity of being heard.
Final Decision: The Court quashed the order of the District Magistrate refusing to renew the petitioner's license and issued a writ in the nature of mandamus directing the District Magistrate to consider the application of the petitioner for the renewal of his license on its merits.
SAPRU J.:While agreeing with the order proposed by my brother Mootham, I would like to point out that, having regard to the nature of our Constitution, a licence for the carrying on of a business or profession cannot be looked upon as a mere privilege which is within the unfettered discretion of the Executive Authority empowered to grant it.
Particular emphasis has been laid in Art. 19(1)(g) on the right to practice any profession, or to carry on any occupation, trade or business, subject, of course, as laid down in Art. 19(6), to any reasonable restrictions in the interests of the general public as may be placed on it. In guaranteeing this right the founding fathers were, no doubt, influenced by their concept of the functions of the State. As is clear from the directive principles of State policy to which I think it is permissible to refer in this connection, they were establishing a State guided by certain directive principles which, though not justiciable, were, nevertheless, to be fundamental in the governance of the country, it being its duty to apply them in making laws. For after stating in Art. 38 that the State shall try to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life, the founding fathers went on in Art. 39(a) to lay down that State shall, in particular, direct its policy towards securing that the citizens, men and women, equally, have the right to an adequate means of livelihood. A refusal to renew a licence on grounds other than those which the licensing authority can legitimately take into consideration can dislocate and paralyse, in the case of a businessman, his entire business and deprive him of the means of earning his livelihood.
Necessarily, therefore, a misuse of that power can frustrate the very purpose of the welfare State established by the Constitution of this Country. I would like to emphasise that it is necessary to keep this background as the directives represent the political philosophy underlying the constitution in view in considering the questions raised by this application.
2. Now, what are the main facts of this case ? In 1949 the applicant applied for and was granted licence in Form B1 under the U.P. Controlled Cotton Cloth and Yarn Dealers Licensing Order, 1948, to buy and sell controlled cloth. This licence was, in the initial instance, to be valid up to 31st October 1950. Thereafter this licence was renewed on two successive occasions for a period of one year each. It expired on the 31st October 1952. Before its expiry on the 9th May 1952, the applicant was served with a notice that the District Magistrate had cancelled his licence for reasons which were not stated by the District Supply Officer in his communication to the petitioner.
On receiving that notice of cancellation, the petitioner came to this Court praying that the aforesaid order cancelling the petitioners licence be quashed. A Bench of this Court admitted the aforesaid miscellaneous application and passed an interim order staying the operation of the District Magistrates order cancelling the licence. The allegation in the affidavit which has been presented to this Court on behalf of the petitioner is that, even after that order, the District Magistrate declined to permit the applicant to ply his business under the licence on the ground that the order of this Court was not clear and required clarification. It is stated in the affidavit that the view taken by the District Magistrate was that though this Court had directed that the order cancelling the licence should be suspended, it was nowhere ordered that the licence should be returned to the applicant.
On the 22nd June 1952 a Bench of this Court directed the District Magistrate to give possession of the licence to the applicant. On 25-9-1952 which was within the time allowed by law the petitioner presented an appli
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